This is where to put extensions which are local for a particular
TYPO3 installation. The typo3conf directory is always local, containing
local configuration (e.g. LocalConfiguration.php), local modules etc.
If you put an extension here it will be available for a single TYPO3
installation only. This is a "per-database" way to install an
extension.

Local extensions take precedence which means that if an extension
exists both in typo3conf/ext/ and typo3/sysext/ the one in typo3conf/ext/
is loaded. This means that extensions are loaded in the
order of priority local-system.